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Quarterly Update: Global Trends in New Issuance

It’s no secret that the new issuance market is on a bit of a downswing, at least when viewed alongside 2014’s numbers. Yet, despite what has thus far been a slow year, there have been bright spots, both within specific sectors and, most notably, on the international scene.

Our latest Quarterly Update takes a look at the market from a global perspective. Our coverage of the last quarter (Q1 2015) is supplemented by a more expansive look at the global scene, in particular, China and Israel, and the way those two countries have been making their presence felt within the new issuance market.

It’s clear that after the two blockbuster years of 2013 and 2014, IPOs aren’t debuting quite so fast and furiously this time around. Last year over the same time frame, 65 IPOs hit the market, raising $11.8B. Thus far in 2015, less than half that many IPOs have landed, with the 31 debuts combining for $5.6B in proceeds. The current 6-month pipeline doesn’t auger much of a change, showing a considerable year-over-year drop in the number of upcoming deals, with 59 issuers expecting to raise a combined $6.9B in proceeds, a decline of 15.7% compared to the year-ago period. So it doesn’t seem likely that 2015’s numbers will ever catch up, especially without a juggernaut like 2014’s Alibaba looming. Which isn’t to say that everything is slowing down.

Thanks in part to Alibaba’s magic, the big story dating back over the past few years has been the rise of both China and Israel on the new issuance scene. China’s surge began as far back as 2005, since which the country has introduced 126 new issues to U.S. markets for a combined $46.9B in proceeds, the most of any foreign nation on US exchanges in that time frame. Obviously, Alibaba was the biggest, debuting last year to record numbers and accounting for more than half of China’s total proceeds, but it hasn’t been the country’s only impressive IPO.

Several IPOs from the Consumer and Technology sectors have broken the $1B threshold. Also of note: China’s Consumer IPO volume marks the greatest new issuance total from the two sectors (49 from Consumer Goods and Consumer Services) for a non-U.S. nation since 2001, while the Tech sector has seen 48 debuts over that same period.

Israel’s growth has come in a slightly more familiar sector (especially to readers of this blog), and one that, despite 2015’s slower numbers, is the year’s most prodigious overall: Healthcare (the sector has once again dominated the deal count thus far in 2015, accounting for 14 of the quarter’s 31 offerings and $1.7B in proceeds). More specifically for Israel, it’s two sub-sectors within Healthcare: Biotech and Pharma.

Since 2012, Israeli has placed 11 Healthcare IPOs on U.S. exchanges, all coming out of the Biotechnology and Pharmaceuticals or Medical Equipment industries. In fact, of the nine Israeli debuts hit U.S. markets last year, all but one hailed from the aforementioned micro sectors (the outlier? Mobileye, an Automotive Tech company that raised $1.0B last summer in a watershed moment for Israel-domiciled issuers; it marked the largest-ever IPO outside of the country.) Putting a slight damper on those numbers is their price performance, as Israel’s Biotech and Pharma offerings lag behind the U.S. when it comes to both their first-day pop and their offer/current returns. But the country still boasts the second-highest number of U.S. debuts since 2005 (26 IPOs, behind China’s 126).

Since 2001, 351 internationally-domiciled issuers have listed on US exchanges, accounting for 16.9 over the timeframe. Thus far in 2015, international IPOs have matched that pace, with 5 of the 31 IPOs. And looking forward, international IPOs will continue to have a presence on U.S. exchanges as seven non- U.S.-domiciled issuers are expected to make their public debut this year, accounting for 11.9% of the current backlog of 59 IPOs. Notably, three of the seven expected international IPOs hail from the Industrials sector, the surging sector we touched on last month.

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